State panel critical of stem cell institute

Commission offers structural changes

A critique of the state stem cell institute that calls for shrinking its board and other structural changes drew a strong response from the group's chairman, who said the moves would cause “unacceptable” delays in the group's work.

After an eight-month study, California's Little Hoover Commission yesterday released a 70-page report that said the stem cell institute's structure “is not adequate to protect taxpayers' interests or serve its own ambitious goals.”

The state oversight commission found that the size of the 29-member board, including representatives of institutions that receive stem cell grants, “fuels concerns that the committee never can be entirely free of conflict of interest or self-dealing.”

The commission, an advisory body that recommends ways to improve state government, undertook its work last fall at the request of two legislators. It looked at concerns about perceived conflicts of interest, the transparency of spending decisions and the powers of the two top stem cell officials.

In broad terms, the review found that the agency has delivered on its mission of allocating funds — $700 million to date — to speed stem cell research. The agency, known as the California Institute for Regenerative Medicine, was authorized to spend $3 billion in a 2004 ballot initiative.

But it was the specific recommendations that drew the fire of institute Chairman Robert Klein, who was a driving force in getting the initiative passed and has been closely linked with its progress.

In a statement, the institute said the recommendations were based on an incomplete understanding of its operation and were so sweeping as to require another ballot initiative to implement.

“To disrupt and delay the agency's critical work for a year, or even six months, because of what the commission's staff has called perception issues is unacceptable,” Klein said. “Let them talk perception to patients who miss out on a therapeutic breakthrough.”

The Little Hoover Commission's recommendations included cutting the board to 15 members, including four with no ties to institute-funded entities.

The commission also called for realigning the roles of the president and chairman, eliminating an arrangement in which some staff members report directly to Klein. It also called for a succession plan.

“(The institute) could not exist without the time, effort and personal resources that Mr. Klein has devoted to it,” the report said. “The personality-driven structure may have provided the organization initially needed stability and focus, but it does not portend well for sustainability.”

In a written response, the institute said its board size is comparable to that of the University of California regents and includes many members without ties to grant-receiving institutions. It said the division of authority between Klein and President Alan Trounson is working well.

But one observer who was among those calling for the Little Hoover Commission review said the institute shouldn't dismiss the recommendations.

John Simpson of the Santa Monica group Consumer Watchdog said many of the recommended changes could be implemented without delay. One example would be setting up a program to discipline board members who regularly miss meetings.

“This is a thoughtful and thorough analysis from a bipartisan group with no ax to grind,” Simpson said. “(The institute's) management and board should listen to its advice.”